Correlation Between CVS Health and Avrot Industries
Can any of the company-specific risk be diversified away by investing in both CVS Health and Avrot Industries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CVS Health and Avrot Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health Corp and Avrot Industries, you can compare the effects of market volatilities on CVS Health and Avrot Industries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CVS Health with a short position of Avrot Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Avrot Industries.
Diversification Opportunities for CVS Health and Avrot Industries
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Avrot is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Avrot Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avrot Industries and CVS Health is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CVS Health Corp are associated (or correlated) with Avrot Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avrot Industries has no effect on the direction of CVS Health i.e., CVS Health and Avrot Industries go up and down completely randomly.
Pair Corralation between CVS Health and Avrot Industries
Considering the 90-day investment horizon CVS Health Corp is expected to under-perform the Avrot Industries. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health Corp is 1.43 times less risky than Avrot Industries. The stock trades about -0.36 of its potential returns per unit of risk. The Avrot Industries is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 6,950 in Avrot Industries on January 26, 2024 and sell it today you would lose (380.00) from holding Avrot Industries or give up 5.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
CVS Health Corp vs. Avrot Industries
Performance |
| Timeline |
| CVS Health Corp |
| Avrot Industries |
CVS Health and Avrot Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Avrot Industries
The main advantage of trading using opposite CVS Health and Avrot Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Avrot Industries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Avrot Industries will offset losses from the drop in Avrot Industries' long position.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
| Avrot Industries vs. Alony Hetz Properties | Avrot Industries vs. Melisron | Avrot Industries vs. Shufersal | Avrot Industries vs. Israel Discount Bank |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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